Carriers Invest in 'TelevaultingCarriers Invest in 'Televaulting

Posted: 03/2000

Carriers Invest in ‘Televaulting
By M.J. Richter

Competitive pressures, combined with the capabilities and reach of the Internet, are
driving corporations of all sizes to adopt an e-commerce strategy as fast as possible.

Many already have discovered that a successful e-commerce strategy requires a place–or
places–to store, back up and recover all those enterprise data, the network connections
to link data sites with corporate offices and the technical expertise to manage all that
complexity.

They also have learned that creating such a foundation demands enormous investments, in
terms of hardware, software, bandwidth, real estate, experienced personnel and time. Even
if a given company is fortunate enough to command most of those resources, no business
organization has enough time.

In today’s Internet-driven economy, the time-to-market factor can make or break an
e-commerce initiative. Not surprisingly, therefore, companies of all sizes opt to
outsource their data-storage operations and focus their efforts on their core businesses.

In doing so, they present network service providers with numerous and lucrative
opportunities in a fast-developing segment of the market. By providing enterprise
customers with data-storage services, either directly or in alliances with other types of
suppliers, network service providers can create additional revenue streams, expand their
customer base and strengthen their own competitive positions.

Leveraging Existing Assets

Obviously, many service providers already possess at least two critical portions of the
enterprise e-commerce foundation: the high-capacity networks needed to link data centers
with enterprise end users and long-standing relationships with the enterprise IT
department.

Several facilities-based service pro-viders also have strong relationships with
value-added resellers, many of which have their own long-term relationships with
enterprise customers.

To augment what they can bring to the table, numerous service providers are building
storage capacity, in the form of data centers designed specifically for web hosting,
application hosting and other e-commerce requirements.

Chart: Application "On Demand"

For example, Qwest Communications International Inc. (www.qwest.com)
operates seven so-called CyberCenters around the nation. By the end of the year, the
company plans to bolster that capacity by adding seven more facilities and expanding the
existing ones in Burbank and Sunnyvale, Calif.

Similarly, GlobalCenter (www.globalcenter.net),
a Global Crossing Ltd. company (www.globalcrossing.com),
currently operates six data centers and plans to add 11 more this year, including
facilities in Amsterdam, Frankfurt, London and Paris.

In addition to their own networks and storage facilities, network service providers now
have access to the other crucial portions of the enterprise data-storage foundation: the
relevant hardware/software platform that enables them to manage all that data. Among the
growing number of vendors supplying these platforms is Toronto-based D.S. Data Storage
Inc. (www.dstelevaulting.com).

A Golden Egg Relationship

The company’s flagship offering is its DS-Televaulting product, an automated on-line
backup, storage and recovery technology that transports data over a dedicated or dial-up
telecom link to a secure, off-site data vault.

Based on client-server architecture, the platform consists of three components: a
backup-and-recovery software program; a Windows GUI; and an off-site, on-line RAID 5 data
vault. The service provider owns that "electronic vault" and places it on the
backbone network. The DS-Televaulting platform supports a variety of connections,
including analog modem, cable, ISDN, x digital subscriber line (xDSL), T1, T3 and
fractional T1 connections, frame relay and ATM.

Chart

Last September, D.S. Data Storage launched an authorized service provider program aimed
at telecommunications carriers, ISPs, application service providers (ASPs) and systems
integrators. David Farajun, founder and CEO, emphasizes his company does not sell directly
to enterprise customers. Rather, it specifically has designed the platform for sale to
service providers so they in turn can sell it to their enterprise customers.

"The relationship between service providers and their customers is the golden
egg," he says. "They have first contact with the LAN administrator, they’ve got
credibility, they’re bonded and they’re trusted."

Plus, from the service provider’s perspective, Farajun says it’s "much easier to
do business with existing customers than with somebody from Timbuktu who’s coming to
provide outsourcing services to those customers."

Any service provider interested in purchasing the technology goes through a
qualification and training process with D.S. Data Storage. Once that’s completed, Farajun
says his company offers the service provider a choice of three possible agreements:

* No up-front payment but a fixed division of subsequent revenues derived from
data-vaulting services;

* A pay-as-you-go deal, with the service provider making monthly payments to D.S. Data
Storage, based on the actual gigabytes of data stored; and

* An agreement that calls for the service provider to pay D.S. Data Storage a licensing
fee up front, plus a monthly per-gigabyte-stored fee.

Are network service providers ready to take advantage of the opportunities emerging in
the enterprise data-storage arena? Absolutely, Farajun says. Although he declines to
identify them, D.S. Data Storage already has two CLEC customers, "one of which is
already in, and the other one is testing our product."

Farajun says, "The bandwidth business is driving them nuts, and the margins are
going to be almost zero. They have to differentiate themselves with additional value-added
services. While they’re selling the bandwidth, they can sell the backup, recovery and
electronic vaulting services."

E-Storage Opportunities

Another platform vendor teaming with service providers is Hewlett-Packard Co. (HP) (<ahref="http://www.hp.com">www.hp.com

), which launched a major initiative in the
high-end data-storage market last September with Qwest. The program combines HP’s
SureStore E solution, a platform comprising disk arrays, storage-management software and a
fibre-channel switch, with Qwest’s IP-based broadband network and its data-center
operations.